By Rebekah Barsch, executive officer at Northwestern Mutual. Rebekah writes about financial planning and retirement.
It’s finally here. After years of working, you’re ready to make the transition from work life to retirement life — whether fully or partially. But what if you’re retiring at a different time than your spouse? If you’re in that situation, there are a few things you should know first.
When one half of a couple retires, it creates an entirely new household dynamic — one that can cause emotional stress if it's not dealt with openly.
YOU GET TO DELAY TAPPING SOCIAL SECURITY AND OTHER SAVINGS
Because your spouse will continue to earn an income for a period of time, this is an opportunity to postpone tapping into some or all of your retirement nest egg and/or delay claiming Social Security, either of which will help to improve your long-term financial picture. For example, although you will be eligible for Social Security benefits as early as age 62, you'll lock in a higher monthly benefit for the rest of your life if you wait to begin receiving payments.
YOU GET TO EASE INTO YOUR RETIREMENT BUDGET
When you retire, your budget typically changes a lot. You have to create your own income with things like Social Security, pensions (if you have them) and your savings. At the same time, your spending will likely change. You'll have fewer work-related expenses such as gas, parking, lunches and dry cleaning since only one of you will be working. But you'll also have two potentially significant, new expenses to add to the mix — health insurance for you and/or your spouse (depending on your age and situation) and spending money for your retirement interests.
When the first spouse retires, you can begin to get a truer sense of what your retirement spending habits will be, so you can do a better job of forecasting what you'll need as a couple when you both retire.
YOU'LL NEED TO ADJUST TO A NEW HOUSEHOLD DYNAMIC
This is a potential pitfall. When one half of a couple retires, it creates an entirely new household dynamic — one that can cause emotional stress if it's not dealt with openly. For example, when your spouse still gets up and goes off to work each day, he or she might expect you to take on more of the household chores since you’re 'home all day.' But have you talked about it? If the two of you are not on the same page about what's expected, you could unwittingly create tension between you.
There may also be a tendency for your spouse to consider his or her paycheck 'my money' as opposed to 'our money.' Be sensitive to this. It takes more than money to make a household function smoothly and there are a lot of ways you both can contribute.
Although only one of you will be retiring, both of you will be affected. So talk through your expectations and decide together what you'll spend, how you'll cover your expenses and who will be responsible for what as you start this new chapter in your lives.